Gold ornaments are not just for decoration but serve as a crucial asset against life's uncertainty and inflation. They can be monetized during a financial crisis or when in need of urgent cash. A gold loan has always been a popular borrowing option due to the minimum documentation requirement and easy eligibility. All major banks and NBFCs offer gold loans at attractive interest rates and easy terms and conditions. In this type of secured loan, you need to submit your gold ornaments as collateral. It also breaks the borrowing obstacles for people with low income or poor credit scores. However, when applying for a gold loan, you should use a gold loan amount calculator to make the right decision.
Mentioned below are some of the critical points you need to consider while applying for a gold loan.
Loan Amount
Once you check the eligibility criteria of the gold loan, the first thing you should considerate is the amount offered against your valuable gold items. Remember, the loan amount sanctioned will depend on the valuation of your assets. Having pure quality gold will help you get a higher valuation and a higher loan amount. However, no lender will provide 100% of the gold value as the loan amount. Also, you must check the LTV or the loan-to-value ratio offered by the banks and NBFCs, which commonly ranges from 60 to 90 percent.
Check Interest Rate
Before applying for a gold loan, you need to compare the interest rate provided by various banks. Remember, banks and NBFCs determine the interest rate on the loan amount as the risk profile of the borrower. Also, there are some other aspects, like LTV (loan-to-value), repayment tenure, and the amount, considered while determining the interest rate. Some NBFCs are specialized in gold loans and provide lower interest rates and easy terms and conditions. Make sure you compare interest rates from various lenders to select the best deal.
Repayment Options
The gold loan has a more flexible repayment structure than other types of loans. You can select regular EMI repayment, partial payments, or bullet payments at your ease and convenience. When applying for a gold loan, you need to check loan tenure and your capacity to repay the amount. Remember, late payment can cost you more as you will have to pay a certain amount as a penalty for late payment, so be regular with payments.
Reliability of the Lender
In this secured loan, you need to keep your gold items as collateral with the lender. This security remains with the lender till the entire loan amount is paid off. In a default case, the bank or NBFC can use the collateral to attain either some or the total amount given to the borrower. While it is a great way for the lender to protect their sum, borrowers also need to be careful on their side to ensure that the creditor is reliable. So, even if you are getting low-interest rates on the gold mortgage loan, avoid selecting a lender that does not have a good reputation in the industry.
These are a few important points you need to consider when applying for a gold loan.
https://rupeek.com/blog/things-to-know-about-gold-loan-renewal/If you have repaid your loan amount in full along with the interest, you can take out another gold loan with the same lender, pledging the same gold assets.
Keeping up with your mortgage payments can help you reduce your debt and pay it off faster.
The following are the top six money-saving tips for paying off your mortgage faster.Contact North Brisbane Home Loans right away to learn how we can assist you in obtaining a lower interest rate, negotiating with your lender to adjust your repayment amounts, or determining which loan features are best for your financial goals.
